By Justin Pope
The new Post 9/11 G.I. bill, which substantially boosted education benefits for veterans, has been a windfall for large chains of for-profit colleges, according to figures released Thursday by Senate Democrats arguing for tighter regulation of the sector.
Data on the first two years of the program show more veterans — and more of the government dollars that follow them — went to for-profit chains. Of the $4.4 billion the Department of Veterans Affairs disbursed during the 2010-2011 academic year, $1 billion went to just eight for-profit schools. The top seven recipients were all for-profit institutions.
The largest single share went to the University of Phoenix, which collected $210 million through the program, up from $77 million a year ago. G.I. Bill funds for each of the other eight top for-profits also more than doubled from the previous year.
The figures are relatively small in comparison to other government programs like Pell Grants. And they aren't surprising in some respects because the large for-profit chains enroll students across the country and are far bigger than any not-for-profit institutions. Veterans are free to choose to use their benefits at any properly accredited school they choose.
But the G.I. Bill attracts particular scrutiny because of concerns veterans are being aggressively recruited by institutions that generally have higher costs, default rates and dropout rates. For-profits enrolled roughly 25 percent of veterans using the program but received 37 percent of the GI Bill funds.
Veterans are particularly attractive recruiting targets because of the benefits they carry but also because of a loophole in the so-called "90-10 rule." That law requires colleges to receive at least 10 percent of their revenue from non-government sources, and is intended to make them prove their value by attracting private dollars. But dollars from military programs like the G.I. Bill don't count as government support under the 90-10 rule, even though they come from taxpayers.
"It's possible that 100 percent of a college's or university's revenue can come from the taxpayers," said Sen. Tom Harkin, D-Iowa, who chairs the committee, which scheduled hearings Thursday on the 90-10 rule. "No skin in the game. That's not a good situation for the taxpayers."
Harkin's committee has held multiple hearings over the past year on the for-profits. In June, the Obama administration unveiled new "gainful employment" rules that could cut more programs off from government aid if students aren't able to acquire decent-paying jobs.
The for-profit sector says it is taking substantial steps to improve student success rates. Phoenix, for instance, requires some new students to pass a free, three-week orientation program in order to continue. It and other companies have seen substantial drops in new enrollment as they accept fewer academically risky students, and insist they're providing good value to taxpayers.
Indeed, Harkin and Sen. Tom Carper, D-Del., said some for-profits were providing good service to veterans. But they also highlighted the higher dropout rates at many for-profits that leave taxpayers and students on the hook for unfinished degrees.
At the eight for-profit schools collecting the most G.I. Bill funding, more than 400,000 students — around 60 percent — withdrew within one year of enrolling. The figures refer to all students; veteran-specific dropout rates are not available.
"Some of these schools are doing a good job," Harkin said. "But there are some of these, they just want the money."
APSCU, the Association of Private Sector Colleges and Universities, did not immediately respond to a request for comment.